Monday, November 24, 2008

November 24th Recap

Traded perfect today, just didn't get paid in full due to time constraints. I had two trades today, I got in them around 11:30 AM, held them (sometimes in considerable pain) to 2:30 when they finally started working as they should've. I got to textbook reduced risk and par on both but they dropped from the par level down to pretty close to the entry when it was 3:00. My trade rules exit positions at 3PM without exception so I did just that and came out with about 30 pips cumulative. As you can see both went on to the take profits (the green horizontal lines) but did so after rollover and without me. Thats just trading. I traded well today, took solid setups, managed them well, and didn't break any rules. Just sucks that I made +30 rather than the +120 pips I had put these positions on to get.

Heres the AUDUSD setup:

And the EURUSD setup:

Its a short week for me this week. Trading through Wednesday and then calling it quits for the remainder of the week to enjoy thanksgiving with the family.

Trade Results:

EURUSD: +17.80
AUDUSD: +11.40

Wednesday, November 19, 2008

November 18th Recap - When Bad Things Happen to Good People

So today started off with me a bit down in the slumps about yesterdays performance and screwing up on that one order. So I made a point of double checking all of my orders today. But apparently not well enough because another order slipped and kicked me out of a position I was trying to get my stop to par on and ended up exiting me prior to my target being hit.

I had one good trade that worked without fault. The other two were PAINFUL. Unfortunately the EURUSD trade came up to my stop and apparently through it by a partial tick and exited me for a max loss and then went right down to my target. So now I need to make a point of giving my stops not 1 pip, but 2 at their initial stop values so I don't get kicked out of a move by my broker.

The last screw up of the day was in the GBPUSD. I had been holding this trade through ups and downs for the better part of 3 hours. By the time I got it to work so I could get to par it went down and stalled 5 pips from my exit target. Fine. I held through a wave back up close to my stop and it fell down again. At this point it went down and retested the lows. I had already been stopped out of the EURUSD short so I was wanting to lock in profit and end the day on a good note. I saw it retest the lows and then engulf. I'm thinking to myself... ya know, I should just bail, its over. So I did. AGAINST MY RULES. Then of course the next bar went straight down to my target. Go figure. It wasn't a huge difference, but 20 pips of profit is 20 pips of profit.

So all in all, we had a profitable day, but a day that was 100 pips shy of its full potential of the 4 trades taken due to either order entry errors, bad luck with the broker and needing a 1 pip wider stop, and bailing on my management. Disappointing to say the least.

The good thing of note is this. The results if I had been using my old initial stop management? 3 Losses, 1 win. Yup. This new wider initial stop turned 3 losses in the 3 wins (if it weren't for my own mistakes).

Trade Results:

EURUSD: -49.00 (High Ticked Out)
AUDUSD: +16.10 (Order Error)
GBPUSD: +50.10 (I'm a pansy)
USDCAD: +30.82 (Worked so fast even I couldn't screw it up)

Monday, November 17, 2008

November 17th Recap

Didn't have time to update on Friday. It was a horrible day. Down -133 pips on two trades. But it brought something up to the surface that needed to be dealt with and the end results are going to be very profitable in the long run. I took two back to back max losses. Now one trade was a trade that ended up being a double top and reversing. However I got short out of the rejection and was rattled out of my position on a retracement before it walked right down to my profit target without me.

This has happened over and over and over again. So I decided to delve into the issue a bit more with some backtesting of my live trades taken over the past couple weeks. The results were staggering. Over 22 trades using my tighter initial stop placement ended with a net -38 pips and a 57% win rate. By simply changing my initial stop to the previous swing high/low my win rate went to 81% on the SAME TRADES and overall profitability increased from a -38 to a +232. I can't even begin to tell you what a difference that is.

Basically my findings supported what I had long suspected. For those of us who don't trade pullbacks into a trend it is not only improbable, but unprofitable to try and achieve a 1 risk, 2 reward scenario. I had been placing stops at points in a trade that would allow me to keep this "holy grail achievement" that all traders are supposed to use to be successful right? The reality of the situation is this: The 1 risk, 2 reward is a falsely coveted rule of trading for a lot of people. We try and achieve that risk situation because we believe (and are told) it will grow our accounts faster and with less risk. The reality of the situation is the exact opposite. By taking on a bit more initial risk I can stay in my trades regardless of the whipsaw after i'm in them.

In fact my backtesting concluded that I was only flat out wrong about a move where I lost the entire initial stop less than 10% of the time. Those kind of odds make this kind of risk strategy well worth it in my opinion. It would be one thing if I was hitting 40% win rates, but with less than a 1 in 10 chance of taking a max loss on a trade the larger initial risk equals more profit, more of the time.

Pullback traders are able to automatically place stops at the low and by trying to call tops and bottoms to pullbacks can achieve low risk, high reward setups and sacrifice a lower win rate as a result. However, we don't all trade like that, and thus, we need to accept higher initial risk values as long as we have a sound and scalable method that performs higher win rates to offset the higher initial risk.

I also did some testing on scaling out of a position on partials at various targets in the trade but we'll leave that summary for tomorrow. I found some very interesting things!

As for today, I took one setup (the only one that fired off today) and it worked perfectly up to my profit target.

Trade Results:

USDJPY: +29.86

Wednesday, November 12, 2008

November 12th Recap

Another boring day. Lots of action in the A.M. that I was not in and a lot of midday consolidation that I found myself monitoring. But one nice setup formed this afternoon minutes before my cutoff time for taking trades and it worked almost effortlessly down to its target. The frustrating part is this: it would've essentially erased yesterdays loss but due to my one mistake i'm still in the hole for the week right now. Regardless I traded today perfectly and can't ask anything more of the outcome.

In other news there were massive 4H and 1H trades this morning and yesterday that were 110% textbook that i've been monitoring. I wanted to make sure everything is working as it should on every timeframe and not just on the 5 minute. Today's profit off of three trades would've been around 1000 pips. Yes. 1000. So obviously i'd like to move towards taking trades on longer term 15M, 60M, and 240M charts in the future but I feel that I need to get my accounts a bit larger before I start putting on some of the longer term trades. For example a short in the EURJPY last night would've required almost a 300 pip stop... Thats a bit too much of my account than i'm willing to risk at this point.

But i'm happy to report the trades are flowing on all timeframes just as consistently as the 5M. In the future I think they will serve as a very effective tool in smoothing out the equity curve and acting as a hedge against losing trades on one timeframe by supplementing them with winning trades on a different timeframe.

Trade Results:

USDJPY: +36.88

Tuesday, November 11, 2008

November 11th Recap

Horrible day. Should've been 1 trade, 1 loss. Ended up being two trades two losses. Somehow I managed to put on a position that wasn't even a remotely valid trade. Then I was in it and I realized what the hell I had done. Goodbye to 20 pips. That was my only mistake but it was a big mistake. I just got sloppy and didn't double check my grids prior to entry. Disappointed more than anything. 99% of the action occurred this morning and all I got left with was the consolidation to chop me around in the afternoon.

Trade Results:

USDCAD: -38.13
GBPUSD: -19.50

Monday, November 10, 2008

November 10th Recap

Boring day. Most moves occurred prior to 8AM this morning. I had two trades today. One went about +25 before stopping back out at par and the other did the same thing... went +27, I got to par, and it reversed from there. I thought I had adjusted for the spread but I ended up taking a 1 pip loss on the stopout. Thats the only bad part about having a variable spread broker. You can't always be spot on with your stops if you are trying to get out with X amount of pips. All in all, I took the two trades that really had any chance of making money, but both just didn't want to go to a target to pay me and that was the outcome. Perfect entry, managment, and execution. Can't do anything more than that.

In other news, I didn't update friday because there were no trades taken.

Trade Results:

AUDUSD: -1.00
USDCAD: +3.10

Thursday, November 6, 2008

November 6th Recap

Rough day. Markets didn't move ANYWHERE today. So I had a great day yesterday only to follow it up with a horrible one. Typical. What it did cement was the need to keep that management solid. Because the results for this week look to be hinged on yesterdays performance. And without that extra +30 pips from that management mistake the week can literally become negative territory due to one mistake.

Now today I took great setups, textbook management, but the problem was none of the markets followed through, and the two that ended up doing what I wanted didn't do so within the time constraints of my trading hours. So I had to flat one position at par and close the other out for a loss at 3PM because I exit all positions at that time everyday regardless of where they are. They ended up working but I wasn't along for the ride.

So it ended up negative, and by a large amount.

Trade Results:

USDCHF: -17.91, +0
EURCHF: -11.89
AUDUSD: -27.00
EURUSD: -27.00

Wednesday, November 5, 2008

November 5th Recap

Good day today! Had to be patient to make it work. I sat on my duff for 7 hours before I got a signal at 1:30 PM this afternoon. But during that 7 hours I was constantly measuring and waiting for potential setups. I saw the entire picture and I was ready for it. Then around 2:00 PM I got 3 signals all at once. I scrambled to enter all of them and actually got into everything... then I was trying to place stops/targets on 3 different positions as some were already shooting to par stop levels and target profit levels. It was a hectic 10 minutes. But the setups were golden, the management on all but one was flawless. After those three positions were flat I was so flustered from what had conspired I just covered my earlier position from 1:30. It was against my management rules and I should've held. I got +17 out of a position that hit the target for +45. Other than that though I'm really impressed with the method and my execution.

I'd been a little down in the dumps after a fairly lackluster start to this week but i'm glad we are finally getting some pips under our belts! In fact in one of my accounts i've seen a 44% account increase in capital in under three days of live trading. Not only that but i'm currently sitting at a 80% win rate on these trades. Pretty damn impressive if I might say so. Onward and upwards!

Trade Results:

USDCAD: +17.02
AUDUSD: +2.00
EURUSD: +21.00
EURJPY: +44.60

November 4th Recap

Not much happened today. Only one trade signaled which is actually nice because it proves that the method was able to keep me out of the crap I didn't want to be involved with anyway.

Trade Results:

USDJPY: +23.01

Monday, November 3, 2008

November 3rd Recap

Not much time to update tonight so we'll keep things simple. Traded a perfect day today. Nothing really happening. Got screwed by literally 2 ticks on two trades stopping out for a max loss before going onto my profit target without me. That being said, I still had two winning trades to offset the two losers. Ended up net negative by a bit but remember again everything is muted and on hold until the election is over. I might not trade tomorrow due to the election.

The important point here is this: I traded a perfect day. No flaws, solid setups, perfect management. Done deal. Move on to the next day and repeat.

Trade Results:

USDJPY: -29.47
EURJPY: -47.39

Saturday, November 1, 2008

A Fresh Start...

As many of you might've noticed, the updates to this blog have stopped over the past month. I had to do a lot of soul searching, method revision, and planning to get where I am right now. The trades i'm taking now, and the method i'm trading are 110% different from anything posted on this blog previously, therefore, the past is well, the past and is no longer relevant to the achievement of my goals. So I decided to delete all of the previous daily recaps and wipe the slate clean.

I got back to basics by trading a methodology that I have been learning (and trading) under the direction of my mentor for years (since I started trading). However, I never really made it work. I complicated the situation by trying to trade everything or nothing, by trying to reverse engineer out the losses, and expand the wins. When in reality if I just would accept that losses happen and its part of the game then I would be extremely successful applying this methodology. I do have one tweak that I use to pull out the key swings I want to play, and frankly, I believe it to be a pseudo genius application that works amazingly well with my mentors' method. Together, they are EXTREMELY powerful and PROFITABLE.

So while I was out of town this past week I got back in town and was able to perform a forward "backtest" of this past weeks' price action and see where the entries and exits would've been. Following pure entry rules, no interpretation or bias, the system pulled out nearly 700 pips over the past 4 days and a 75% win rate. Now that's something I can put my faith into. So I traded from 9:00AM to 11:00AM on Friday and was able to take 1 trade for +56 pips in the USDCAD using the exact rules.

Starting Monday I will be trading both of my FX accounts with the intention of using the performance that I demonstrate over the next month as a piece of hard evidence that I can provide to clients before they allow me to trade their capital. Yes, that's right folks, I've been approached by three individuals over the past two weeks that all are offering capital for me to trade. But before I take their money and start to grow it along with my own, I want to know that I can demonstrate one month of consistent results and error free trading for myself. This should provide baseline potential return figures as well as an idea of max drawdowns and win rates that can help assure these clients that i'm a capable money manager. It will also allow me time to look into the legal ramifications of trading other people's money and any taxation issues i'm going to run into.

Here's the thing... I really feel confident in what i'm doing for the first time in, well, forever. I think I have a rock solid methodology and rule base to pull money out of any market and time frame. What I lack in consistency and sticking to the rules will fix itself as I start to gain confidence in letting the trades ride, and the edge I have prove itself, not to mention the added accountability other peoples money brings into the equation. For the first time in a long time i'm looking forward to Monday's open and the opportunities that lay ahead. Monday quite literally is going to be the start of systematically checking off every single one of the goals outlined in this blog and I can't wait to get started.

And let it be heard here and now... i'm not changing ANYTHING in my setups from here on out. I've done the dance with every other system and method out there and somehow was fortunate enough to have stumbled onto the most robust and profitable method of them all right out of the gate. Its time I recognized that and stopped trying to find the holy grail and buckle down into the ATM machine i've had all along. I'm so confident in this method that i'm literally just pulling up random stocks, markets, and time frames to see how powerful and robust it really is. I'm actually enjoying what I do with that giddy feeling I found years ago when I was attending my first trading presentation.

Long story short. Success begins Monday - and i'm bringing my A game.